Inside the Internet of Things (IoT) A primer on the technologies building the IoT Inside the Internet of Things (IoT) About the authors Jonathan Holdowsky Jonathan Holdowsky is a senior manager with Deloitte Services LP and part of Deloitte’s Eminence Center of Excellence. In this role, he has managed a wide array of thought leadership initiatives on issues of strategic importance to clients within consumer and manufacturing sectors. Monika Mahto Monika Mahto is a senior analyst with Deloitte Services India Pvt. Ltd and part of Deloitte’s Eminence Center of Excellence. Over the last seven years, she has been involved in various strategic research assignments for clients in the consumer and industrial products industry. Michael E. Raynor Michael E. Raynor is a director with Deloitte Services LP and the director of the Center for Integrated Research (CIR). In collaboration with a broad cross-section of Deloitte professionals from many different industries, the CIR designs, executes, and supports research into some of the most important issues facing companies today. Mark Cotteleer Mark Cotteleer is a research director with Deloitte Services LP, affiliated with Deloitte’s Center for Integrated Research. His research focuses on operational and financial performance improvement, in particular, through the application of advanced technology. Acknowledgements The authors would like to thank Sadashiva S.R. (Deloitte Services India Pvt. Ltd.), Dhaval Modi (Deloitte Consulting India Pvt. Ltd.), and Joe Mariani (Deloitte Services LP) for their research con- tributions; Gaurav Kamboj and Kritarth Suri (both with Deloitte Consulting LLP) for their con- tributions to the IoT technology architectures; and Athappan Balasubramanian (Deloitte Support Services India Pvt. Ltd.) for his graphics contributions to this report. Deloitte’s Internet of Things practice enables organizations to identify where the IoT can poten- tially create value in their industry and develop strategies to capture that value, utilizing IoT for operational benefit. To learn more about Deloitte’s IoT practice, visit http://www2.deloitte.com/us/en/pages/technol- ogy-media-and-telecommunications/topics/the-internet-of-things.html. Read more of our research and thought leadership on the IoT at http://dupress.com/collection/ internet-of-things. A primer on the technologies building the IoT Contents The Information Value Loop | 2 Sensors | 5 Networks | 10 Standards | 16 Augmented intelligence | 21 Augmented behavior | 26 The IoT technology architecture | 33 Closing thoughts | 38 Glossary | 39 Endnotes | 44 1 Inside the Internet of Things (IoT) The Information Value Loop F you’ve ever seen the “check engine” light Something about your car’s operation—an Icome on in your car and had the requisite action—triggered a sensor,1 which communi- repairs done in a timely way, you’ve benefited cated the data to a monitoring device. The sig- from an early-stage manifestation of what nificance of these data was determined based today is known as the Internet of Things (IoT). on aggregated information and prior analysis. Figure 1. The Information Value Loop Augmented ACT Sensors behavior MAGNITUDE Scope Scale Frequency ANALYZE CREATE RISK Security Reliability Accuracy TIME Augmented Latency Timeliness intelligence Network COMMUNICATE AGGREGATE Standards VALUE DRIVERS STAGES TECHNOLOGIES CREATE: The use of sensors to generate information about a physical event or state. COMMUNICATE: The transmission of information from one place to another. AGGREGATE: The gathering together of information created at different times or from different sources. ANALYZE: The discernment of patterns or relationships among phenomena that leads to descrip- tions, predictions, or prescriptions for action. ACT: Initiating, maintaining, or changing a physical event or state. Source: Deloitte analysis. Graphic: Deloitte University Press | DUPress.com 2 A primer on the technologies building the IoT The light came on, which in turn triggered a us—not thanks to any one technological trip to the garage and necessary repairs. advance or even breakthrough but, rather, due In 1991 Mark Weiser, then of Xerox to a confluence of improvements to a suite of PARC, saw beyond these simple applica- technologies that collectively have reached tions. Extrapolating trends in technology, he levels of performance that enable complete described “ubiquitous computing,” a world in systems relevant to a human-sized world. which objects of all kinds could sense, commu- As illustrated in figure 2 below, each stage nicate, analyze, and act or react to people and of the value loop is connected to the subse- other machines autonomously, in a manner quent stage by a specific set of technologies, no more intrusive or noteworthy than how we defined below. currently turn on a light or open a tap. The business implications of the IoT are One way of capturing the process implicit explored in an ongoing series of Deloitte in Weiser’s model is as an Information Value reports. These articles examine the IoT’s Loop with discrete but connected stages. An impact on strategy, customer value, analyt- action in the world allows us to create informa- ics, security, and a wide variety of specific tion about that action, which is then commu- applications. Yet just as a good chef should nicated and aggregated across time and space, have some understanding of how the stove allowing us to analyze those data in the service works, managers hoping to embed IoT- of modifying future acts. enabled capabilities in their strategies are well Although this process is generic, it is served to gain a general understanding of the perhaps increasingly relevant, for the future technologies themselves. Weiser imagined is more and more upon Figure 2. The technologies enabling the Internet of Things Technology Definition Examples Sensors A device that generates The cost of an accelerometer has fallen to 40 cents from $2 in 2006.2 an electronic signal from Similar trends have made other types of sensors small, inexpensive, a physical condition or and robust enough to create information from everything from fetal event heartbeats via conductive fabric in the mother’s clothing to jet engines roaring at 35,000 feet.3 Networks A mechanism for Wireless networking technologies can deliver bandwidths of 300 communicating an megabits per second (Mbps) to 1 gigabit per second (Gbps) with near- electronic signal ubiquitous coverage.4 Standards Commonly accepted Technical standards enable processing of data and allow for prohibitions or interoperability of aggregated data sets. In the near future, we could prescriptions for action see mandates from industry consortia and/or standards bodies related to technical and regulatory IoT standards. Augmented Analytical tools that Petabyte-sized (1015 bytes, or 1,000 terabytes) databases can now be intelligence improve the ability to searched and analyzed, even when populated with unstructured (for describe, predict, and example, text or video) data sets.5 Software that learns might substitute exploit relationships for human analysis and judgment in a few situations. among phenomena Augmented Technologies and Machine-to-machine interfaces are removing reliably fallible human behavior techniques that improve intervention into otherwise optimized processes. Insights into compliance with human cognitive biases are making prescriptions for action based on prescribed action augmented intelligence more effective and reliable.6 Source: Deloitte analysis. 3 Inside the Internet of Things (IoT) To that end, this document serves as a technology architecture that guides the devel- technical primer on some of the technologies opment and deployment of Internet of Things that currently drive the IoT. Its structure fol- systems. Our intent, in this primer, is not to lows that of the technologies that connect the describe every conceivable aspect of the IoT or stages of the Information Value Loop: sensors, its enabling technologies but, rather, to provide networks, standards, augmented intelligence, managers an easy reference as they explore and augmented behavior. Each section in the IoT solutions and plan potential implementa- report provides an overview of the respec- tions. Our hope is that this report will help tive technology—including factors that drive demystify the underlying technologies that adoption as well as challenges that the tech- comprise the IoT value chain and explain how nology must overcome to achieve widespread these technologies collectively relate to a larger adoption. We also present an end-to-end IoT strategic framework. 4 A primer on the technologies building the IoT Augmented ACT Sensors behavior MAGNITUDE Scope Scale Frequency ANALYZE CREATE RISK Security Reliability Accuracy TIME Augmented Latency Timeliness Sensors intelligence Network COMMUNICATE AGGREGATE Standards An overview Figure 3. A temperature sensor OST “things,” from automobiles to MZambonis, the human body included, have long operated “dark,” with their location, position, and functional state unknown or Nonelectrical stimulus even unknowable. The strategic significance of LCD display the IoT is born of the ever-advancing ability to break that constraint, and to create infor- mation, without human observation, in all manner of circumstances that were previously Temperature Electronic sensor circuit invisible. What allows us to create informa- Electrical signal tion from action is the use of sensors, a generic term intended to capture the concept of a Graphic: Deloitte University